Ground settlement (GS) monitoring is a basic prerequisite in civil engineering. A commercialized instrument to meet this requirement has been available with millimeter accuracy. Major difficulties to improve this to micrometer scale, which are needed in special cases such as in high-speed railways, are challenged by the long stability of the sensor in the condition of the extremely slow settlement. A fiber-optic GS methodology was proposed by using a scanning low-coherent Michelson interferometer. One of the paths of the interferometer is formed by the liquid surface, and therefore the readout of the interferometer can make the measurement of the surface approach a micrometer scale. The liquid-contained chambers are hydraulically connected together at the bottom by using a water-filled tube. The liquid surface inside each chamber is at the same level initially. One of the chambers is located on stable ground or at a point that can be easily surveyed, too. The others are located at the points where settlement or heave is to be measured. Differential settlement, or heave, between the chambers will result in an apparent rise or fall of the liquid level, which biased the initial equal status. The experimental results demonstrated that the best accuracy of ±20 μm for GS monitoring was obtained with a reference compensation sensor.